CHAPTER TWO: LITERATURE REVIEW

2.0 INTRODUCTION

Literature Review is a Programme of intensive searching, reading and

evaluation of available documents, written material and reports related to a

given topic of research. Literature review is important because it enable the

investigator to widen the scope of existing studies and enable me to avoid

recreating what is already in existence. Literature review is all about giving

heed to fact from whatever source, the desire to have more side of an issue

than one, and to recognize the possibility of error in the belief that dearest to

us. Many authors through their write ups enable us to hold the problem

confronting co-operative societies in agricultural production and marketing and

the basic solution to these problem.

2.1 MEANING OF CO-OPERATIVE

Cooperative is being defined by Martin (1992) as an association of persons or

individual with variable membership and variable capital who have pooled

themselves together and their resources to solve socio-economic problems of

the members by directly providing goods and services to the member in their

capacity.
According to Akpanenue (2001:11) he defined Co-operative as an association

formed to achieve a common objective. Through the formation of

democratically controlled organization to make equitable contribution to their

capital required. Accepting a fair share of the risk and benefit of the

undertaking in which member actively participate.

According to Berko (1989) he define Co-operative as an association of

individuals or persons with common interest who come together to produce,

buy and sell goods and services for the sole interest or benefit of their members

or co-operative body.

H. Calvert define co-operative as a form of organization whereby voluntarily

association together as human beings on the basis of equality of themselves

and without partiality. Article (8) of International Co-operative Alliance (ICA)

define Co-operative as any association or person irrespective of its illegal

constitution shall be regard voluntary membership.

According to George Jacob Holy Cake (1817-1906) define Co-operative as

organized self-help by honest trade, the profits being equitable divided among

those who create them. Holy cake further stated that whether by work of the

hand or brain, the profit should be divided among those who create them.

There is familiar use of the world co-operative which means two or more

person acting to produce some result as when man lever act together to move a
log, or a cost paw is employed to chest nuts from the fire or when one thief

held the bag. While another fills it or as when a physician manias the daughter

of an undertaker, with a view to write the business co-operative means concert

for the diffusion of wealth.

According to Erdman and Tinley (1957) who see Co-operative association as

a voluntary association of person with common interest, formed and operated

along democratic lines, for the purpose of suppling services as a cost of its

member contributed both capital and business. Erdman and Tinley further said

that Co-operative can be formally organized within an institutional framework.

According to Dr. Fary, who see Co-operative Society as an organization for

the purpose of joint trading, originating among the weak, and always

conducted in an unselfish spirit on such term that all who are prepared to

assumed duty of member may share in its reward in proportion to the degree in

which they make use of other association.

According to Robert Owen (1771-1858) he was the first initiator of co-

operative movement in Britain, he however, did not start with consumer co-

operative society but, with what are referred to as villages of Co-operative of

Owenite Co-operative communities. According to an American writer I.P

Warbasce, he sees Co-operative as voluntary organization of consumer into a

society controlled as democratically possible for the purpose of directing

supplying their immediate needs by observing definite and generally

acceptance rule of action.

2.3 MARKETING PROBLEM IN CO-OPERATVES:

The conceptual is to examine the challenges and opportunities of these

societies in agricultural production and marketing.

Financing Problems: one producer expects to get his money upon immediate

sole of his product. Another producer wishes to receive a down payment sale

of its production. Sometimes it is even necessary to store the crop, production

for many months before it can be sold. It is also possible that the output will be

sold at distant market, which entails transportation cost to sometimes, the

retailers with delay in their payment. All these factors produce a clash of

interest between the need of the production and the existing possibilities of the

Co-operatives.

Transport Cost: This is another notable marketing problem in cooperative.

Large amount of money is being spent on the transportation of the produce to

the market in other to sell them. Sometime, the products need to be

transported, carried to a long distant market to be sold. This results to expenses

on the part of the co-operative. Problem of middlemen: marking is the process

that an agricultural product goes through on its way from the producer,

supplier to the consumer. Traditional meeting involves several intermediary

stages within the process. The result is, of course that the consumer pay

exorbitant price for his production.

Naturally, it is in the interest of both producer and consumer that the number of

steps in the marketing process be reduced as much as possible. The result: The

producer will earn more and the consumer will pay less. The first form of

marketing is the traditional marketing circle. The peasant sells his production

at a local market while held in his village 5or 6 days.

This is the first stage. The intermediary who buys the product transports it

usually on overhead small open truck covered with a tarpaulin to a regional

market. Another intermediary will buy those goods and transport them to urban

market where the retailers will come to get their suppliers for sale to the

consumer. This way agricultural produce has undergone too many stages from

producer to the consumer. All intermediaries have benefited from this process,

but not the producer nor the consumer. Further problem of marketing in Co-

operative is the problem of distance.

There are great distance between the Co-operative branches and the farmers in

the village. The management of those co-operative are not professional, and

May of the societies are in fact reduced to waiting for thing to happen.

Absence of a linkage between marketing and credit. The cardinal problem of

the marketing co-operative is the lack of link between marketing and credit,
there is no free and smooth linkage between marketing and credit. This serves

as a problem on the part of co-operative. Free flow of information or linkage

between a particular. Thing to the other is the bedrock and pillar of success and

progress, but, reverse is the case. Credit problem naturally, the farmer would

like to sell his produce for cash and thus requires the co-operative to have

command on considerable liquid resources, for which it must obviously pay

dearly. But, it is not so. Many times, goods, products are bought on credits.

And those people who bought them are not willing to pay appropriate time.

This is a serious problem. Problem of packaging, transporting, processing and

storage. This is another serious problem of marketing in Co-operation. The

products are not properly packaged, processed and stored. Lack skill

manpower.

In fact, to experience progress, growth, development and breakthrough is any

organization set up, the issue of skilled manpower cannot be underrated,

overlooked or overemphasized. As regard the marketing of co-operative, some

of the people that are managing, coordinating, overseeing them are not

competent, experienced, skilled, qualified and knowledgeable to the level of

coordinating or controlling the affairs of the co-operative. These people are

more or less amateur in term of skill, experience, knowledge and the like.
 BASIC SOLUTIONS TO MARKETING PROBLEMS IN CO-

OPERATIVE

Availability of Working Capital: there must be adequate availability of

working capital to farmer in order to carry out their operations and

responsibilities efficiently and effectively. There must be financing on short

term by a bank and financing enterprise where the members of the co-operative

are also the shareholders. Such a financing enterprise should be established by

the marketing co-operative. It is the most advantageous and co-operative

solution. Cheap credit should be allocated, offered to the farmers provided they

sell their product or output through the co-operative.

Besides, when the co-operatives has determined the exact quantities which it

will be able to sell, it is in its own interest to make agreement for sales in

advance. A sound sale crowns the producer’s work. This is the reason the

establishment of a co-operative is a necessity to the farmers. The co-operative

prevents unhealthy competition between its members, sorts out the product

conscientiously and directs the supply towards the demand. When there is a

surplus in production over the consumption, in order to save expenses for

middlemen who benefit from various field such as bed weight, very low prices,

and loans at high rate of interest when the system in force does not meet the
requirement at all, involves many intermediaries who compensate very weakly

for producers work.

Thus marketing co-operative should offer it member a more efficient service

than that in force, so that its members obtain a greater profit from their works.

Regarding the problem of middlemen or intermediaries in Co-operative

activities, it can be solve or eliminated through a marketing co-operation

owned by the producers should aim at reducing to a minimum number of

marketing stages. The co-operative should organize a national network that

will take care of the collection, transportation, storage, processing and sale of

agricultural production for the local market. This will help to reduce the

number of storages in the marketing circle. Another alternative is to reduce the

number of steps even more. The alternative involves direct contact between the

marketing co-operative owned by the farmers and the consumer co-operative

owned by the consumers. Thus, the sale of agricultural product takes place

from one co-operative to another and in principle, the profitability for the

producer increase, while the purchase price for consumer decreases. This

situation, though for removed from the traditional marketing circle, does not

get far enough, it is still necessary to eliminate superfluous steps in the

marketing circle. The basic solution to the problem of credit is by selling the

farmer’s produce on a commission basic. More so, the co-operative should

offer its members an improved bargaining position in regard to services such

as transportation and the offer must be capable of affecting a better sale. The

better the service the more the members will be keen and willing to join the co-

operative. More members in the co-operatives will enable a reduction in the

price for various services as well as in running cost. The duty to maintain

services such as storage, bulk transport, extended credit, market survey, co-

operative education. While the single farmer is generally unable to achieve. It

is observed and noticed that the farmers are exploited seriously.

The marketing co-operative should on account of its private traders, on top of

the high level of management. Marketing co-operative should be in the

position to process the farm produce, prevent and preserve them with chemical

such as insecticides, pesticides, fungicides, rodenticides, etc. This body should

also endeavour to fix certain price on each produce ensure price stability,

prices should be tagged to ensure adequate information about the price of each

product in the market. Taking for instance, ‘A’ is selling a product at N500.00

‘B’ must sell his own at the same price.

EXCHANGE OF GOOD FOR CASH IN THE MARKET

After taking the goods to the market, marketing co-operatives sells the goods

in form cash. The products are sold to the members first at affordable price and

others to the public at higher prices. The amount realized will be kept in the
co-operative purses. Through this body, the exchange of goods for cash in the

market has been made possible.

GRADING

Marketing cooperative should ensure that each product is graded for

packaging. The product should be graded according to their kids.

PACKAGING

In this case, marketing co-operative help in packaging of the farm product for

easy transportation and allocation in the market for sale. Packaging also solves

the problem of spoilage because all the package goods must be have undergone

through processing. Kotler (2016) defined packaging as the ‘physical

container or wrapping that holds and protect the product for sale, storage, and

use.’

Stanto defines packaging as the general group of activities in product planning

that involves designing and producing the container or wrapper for a product.

Packaging Type: He can identify three type of packaging thus.

1. The primary package: This refers to product immediate

living/wrapper. It remains on the product until the consumer is ready to

use it. i.e. sweet, chewing gum, toilet soap, it retained throughout the

entire life span of the product.

2. Secondary Packaging: these are addition layers that protect the primary

package which are discard at the level of wholesalers or retailer.

3. Shipping Packaging: This refers to further packaging important for

storage, transportation, etc. in wooden boxes, metal boxes, creates, etc.

IMPORTANCE OF PACKAGE

i. Protection most produce need to protected from environmental

hazard such as intense light, heat, cold, etc for the product to be

durable.

ii. Product identification and differentiation: A particular manufacture’s

product can be differentiated form those of competitors by its

package.

iii. Economy: An acceptable package should be acceptable to the

manufacturer, marketer and the entire consumer. For instance, most

photograph have moved from glass framed enlargement to wooden.

Labeling: Agbo (2016) defined label as A tag or marker attached to a

product, packaging, or container that provides information about the

product, its ingredients, instructions for use, and other relevant details.
IMORTANCE OF LABELS

i. Instruction: Labels give instruction about how to use product, such

instruction includes storage and usage of drugs, washing and

maintenance for garments.

ii. Promotion: Labels provide point of sale promotion as potentials

customers learn more about product.

iii. Information: The main purpose of labeling is to provide

information; many products require more complete identification of

their make and function.

The law stipulates of fairly complete list of ingredient for patent drugs,

processed foods, some cosmetics etc. pressure from customer groups and

competitors induce marketers to give detail information about products on

label. To crown it all to overcome marketing problem in cooperative if

question must be addressed and carefully and properly what product should

produce and sell in the market? What express in regard of production?

What species are marketable every season? What quantity and quality are

preferred? What are the perishable items that can be stored and under what

condition? What is the present marketing system? What system of payment

is being practiced for the producers? Is any advanced payment allowed just

after the sale of the product? What is the best marketing circle of the
 production? Does the product undergo a process for its improvement? To

have a sound knowledge of the middlemen. Source: internet

PROBLEMS:

Inadequate capital: Cooperative may not have enough funds for production.

Non-repayment of loan: Cooperative may have difficulty recovering loans

due to crop failure, poor yield, and debtor dishonesty.

Fraud and embezzlement: Cooperative may experience embezzlement by

dishonest members.

Conflicts: Cooperative may experience conflicts and lack of understanding

between members.

Low financial sustainability: Cooperatives may have low finance

sustainability

Low adoption of technology: Cooperative may not precision agriculture

technologies.

PROSPECTS:

Economics sustainability: Cooperative can contribute to economics

sustainability of rural dwellers.

Pooling resources: Cooperative can help farmers pool their resource to

reduce cost and increase profits.

Access to credit: Cooperative can provide access to credit for working capital

and investments.

Access to machinery: Cooperative can help farmers’ access costly machinery

that can enhance production.

FUNCTIONS OF CO-OPERATIVE

The function of Co-operative Societies is general note that includes the

following:

i. Provision of economic benefit to consumer in large scale

ii. Jointly provision or secure of input easily of lesser price and effort

iii. Issuing of loan credit facilities to members.

iv. Marketability of their product

v. Provision of room for efficient production arising from various

specializations.

vi. Guide members for development purpose.

1. Cooperative theory: emphasizes the important of member ownership,

control, and benefit sharing in cooperative societies (Barton 2019).

 2. Agricultural cooperative theory: focuses on the role of cooperatives in

Agricultural production, marking and distribution (Helmberger & Hoos

2008)

Benefit of cooperative societies in Agricultural production

1. Improved Efficiency: cooperative can reduce transaction costs, improve

resource allocation, and enhance production (Kumar, 2006)

2. Increase Bargaining power: cooperatives can negotiate better price,

improve market access, and reduce market risk (singh, 2015)

3. Enhance Income: cooperatives can increase farmer’s income through

improved price, reduced cost and increase market share (Mishra, 2017)

Challenges facing cooperative societies in Agricultural production:

1. Management and Governance: poor management, lack of transparency,

and inadequate governance can hinder cooperatives performance

(Wsnysms, 2017)

2. Financial constraints: limited access to credit, high interest rats, and

inadequate financial management can constrain cooperative growth

(Ogundele,2017)

Success factors for cooperative societies in agricultural production:

 1. Strong Leadership: effective leadership, vision, and strategic planning

are essential for cooperative success (Kumar,2006)

2. Member Participation: active member participation, engagement, and

commitment are critical for cooperative growth and sustainability

(Singh, 2015)

3. Market Orientation: cooperative must be market- oriented, responsive to

changing market conditions, and adaptable to new technologies and

innovation (Mishra, 2017)

Future research Direction

1. Digitalization and Technology Adaption: investigating the impact of

digitalization and technology adaption on cooperative societies in

agricultural production.

2. Climate change and sustainability: Examining the role of cooperative in

promoting climate-resilient agriculture, sustainable practices, and

environmental conservation.

3. Inclusive and Equitable cooperatives: studying the factors that influence

the inclusivity societies, particularly in terms of gender, youth, and

marginalized group,

This literature review provides a foundation for understanding the role of

cooperative societies in agricultural production, highlighting their benefits,

challenges, and success factors. Future research direction and build upon this

foundation to explore the emerging issue and trends in the field